The Total Money Makeover: Summary & Review

The Total Money Makeover is a personal finance book in which author Davey Ramsey presents his program for freeing yourself from debt and money worries by changing your mindsets and behaviors. Ramsey recommends paying your debts, avoiding new debt, paying with cash only, saving for emergencies, and investing.

Bullet Summary

  • Pay all your debts
  • Avoid taking up new debt
  • Save up & invest

Full Summary

About The Author:
Dave Ramsey is an American radio show host and a personal finance advisor. He wants to help people never to struggle again to make ends meet. And he does a good job of sharing the very basics of personal finance.

“The Total Money Makeover” has plenty of examples, but I will share here the main practical takeaways.

There Is No Financial Security Today

Dave Ramsey says that most of us have a few financial worries but, overall, feel rather secure.

But that security is illusory, he says.

For example:

Would you still be financially secure if you lost your job?

Probably that just one little thing would change everything, right?

Which, Ramsey says, it means you’re one little step away from financial disaster.

The Solution: Decide to Change Now

What’s the solution, then?

It’s to change right now.
And to put yourself on course to real financial security.

You Must Limit Your Debt

Dave Ramsey doesn’t like debt.

And that may be a euphemism.

He says that debt has become such a part of our culture that simply seems normal to be in debt.

The author is especially caustic towards credit card debt, which gives us the illusion of wealth but only creates future problems.

Here is Dave Ramsey’s plan to get out of debt and into financial safety:

Debt-Free 7 Steps Plan

This is what Ramsey proposes as his 7 steps plan for financial freedom:

#1. Save 1k For Your Emergency Fund

Stop thinking of emergencies as rare events.

Emergencies are part of life, and there’s a 78% chance we will all experience major negative life events.

The first step then is to set aside $1.000 for emergency situations.
This first 1k is for emergencies only and you cannot touch it.

#2. Pay Off All Debt With Debt Snowball

List all your debt from smallest to biggest.

And start paying off the smaller ones. As you successfully erase debt, it will inspire you to tackle the bigger ones.

#3. Grow Your Emergency Fund To Cover Your Life Expenses For 3 to 6 Months

The third step is to grow your emergency fund to cover all your living expenses for a period of at least 3 to 6 months.

This way, you can survive a job lay off until you find something new.

#4. Invest 15% of Your Income

Ramsey says that for a comfortable retirement, you need to invest 15% of your income.

The author recommends mutual funds.

My Note:
Many other wealth books don’t recommend mutual funds for the high fees. Also check out: MONEY: master the game

#5. Save For Your Children’s College To Help Them Avoid Debt

If you have children, Ramsey recommends you send them to school debt free.

How to do it?

Well, plenty of ways:

  • With a scholarship
  • Saving up with an Education Savings Account which is tax-free
  • Choose cheaper universities
  • Avoid college altogether

While the last one seems like a cop-out, the author cites Emotional Intelligence to say that only 15% of success is because of training and education.

Thus, he argues, going into debt for college might not be worth it.

#6. Pay Off Your Biggest Debt (Mortgage)

The biggest debt is often the mortgage, and that’s what you should aim to pay off ASAP.

It starts from the moment you take the mortgage: make it as short as possible.

The author says that borrowing against your home to take advantage of lower interest rates is a terrible idea.

#7. Build Wealth & Give

Now you can start focusing on building wealth, and enjoy the pleasure of giving and helping others.

Finally: Have Fun

The Total Money Makeover doesn’t want you to live like Scrooge McDuck but to enjoy life as well.

As long as you can spend without going into debt and can afford… Do enjoy your disposable income.

And to maximize your disposable income the author recommends you take advice from the best CPAs, tax advisers and lawyers, which is the same suggestion Kyosaky shares in his popular Rich Dad Poor Dad.

total money makeover book cover

Real-Life Applications

  • Write Down All Your Expenses

This little exercise can be very helpful for many personalities that tend to spend easily and sign up for random services.
It can provide a good overview to quickly reduce their expenses.

  • Stick to Your Budget (if you end up at the of the month with little money)

Set aside money in advance for your expenditure and stick to it to avoid “accidental over-spending”.
Again, it’s unnecessary for people living an abundant life and/or naturally careful around money. But for “carefree spenders” it’s very useful.


  • No Debt Agenda (Pushed With Untrue, Unfounded, and Nonsense Examples)

The author says we shouldn’t impinge on debt.
And that’s true IF debt is used to finance poor choices that come at a heavy future cost.

But it’s not true if debt is taken up to, say, increase personal skills or fund an income-generating project.

To land credibility to his “no-debt agenda” he says that most wealthy people stay away from debt and some of the best companies are completely debt-free.

Well “most” and “some” mean completely nothing.
Some of the best companies take up debt, too. And some wealthy individuals used debt as leverage to get even richer.
Or they take up debt simply because it can make financial sense.

Ramsey falls for induction reasoning fallacy here -and driven by his own personal bias-.

  • It’s Quite Basic (just like most other personal finance books)

Most personal finance books are simple and quite basic.

Whether you get The Richest Man in Babylon, I Will Teach You How To Be Rich, or The Total Money Makeover, the advise is the same, and it’s simple and basic.

  • Investing In Mutual Funds May Be Poor Advice

I am not a big believer in managed mutual funds, and many other financial advisors feel the same.
It’s not much personal opinion either, it’s just that managed funds tend to have higher fees, so you’re better off with lower-fees ETFs.


  • Touches Upon Mindsets & Habits

Ramsey emphasizes change based on mindsets and habits above knowledge.
And I liked the approach to making the changes. Instead of changing everything at once, for example, you should tackle things one by one to concentrate your efforts and start getting some early wins.

  • Covers all the basics

While we mention “basic” as a con, The Total Money Makeover is great for all of those who aren’t yet aware of these basics -and who can gain by following the suggestions-.

  • Great Mindsets Around Money and “Good Life”

“The Total Money Makeover” has a positive mindset that reminded me a bit of the Ant and the Grasshopper fable. Basically, it’s about avoiding flashy expenses and tackling your future problems today. So that you can enjoy a better life later on.


The Total Money Makeover is a great resource for beginners who are in debt and have no clue about money management.

Let’s say this is your first step into money management.
It’s a first step that is more aimed at “eliminating the negatives” and “getting you out of the hole”.
For that though, The Total Money Makeover may be one of the best first steps for beginners because Dave Ramsey is an honest and straight-talking guy.

However, once you get the basics, if you want to take it to the next level, you absolutely need to switch to some other resources and teachers.
Also because, after the basics, the advice on “avoiding debt at all costs” can actually harm a more advanced life strategist.

Also read:

Read more summaries or get the book on Amazon

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